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McDonalds and Starbucks Supply Chain Management Research Paper

The essay critically analyzes the functionality of the supply chain management of Starbucks and McDonalds. The comparison of the two supply chains comprises some of the best examples of the systems that have been effectively running to attain the organizational goals and objectives. The two supply chains of McDonalds and Starbucks constitute some of the most complex features due to the enormous capacity of the companies. The operations of Starbucks and McDonalds include global outlook operating in six continents around the world and over 100 countries for respective companies. The improvement of customer delivery and customer satisfaction in the products acquired from the companies is a fundamental entity of the supply chains for both companies.

The functionality of both McDonalds and Starbucks supply chains assert the value of quality theory in the entire process to ensure replicating quality in the products ready for consumption. The supply chain of Starbucks operating approximately 28,218 outlets exhibits the value of the quality focus on enhancing its operations for the movement of the coffee beans from the producer to the cup. The supply chain of McDonald’s operating approximately 37,855 restaurants worldwide illustrates the value of quality in the supply of raw materials such as cheese, iceberg lettuce, chicken, beef, Amrit food, and vegetable products. Thus, a comparison of the two supply chains presents fundamental insights on the framework, decision-making processes, procurement, and production strategies.

The Overall Design of the Supply Chain

The overall design of the supply chain utilized by both McDonalds and Starbucks focus on ascertaining the value of quality theory. The value of quality theory ensures that the supply chain management spearheads all its processes to ascertain the “goodness” of the products transformed into consumable or ready foodstuffs (Fristedt et al., 2012). The value of quality ensures that the safety measures in the entire supply chain, its reliability and consistency, durability, and provision of service after the sale to the company. The ascertaining of the value of the products is ascertained through the quality theory that stipulates the measures to take in the movement of its products from source to the targeted destination across the vast network of outlets (Paryani, 2011).

The overall design of the McDonalds supply chain is based on the framework of three legs of a stool. The success of McDonald’s supply chain must ascertain the effective functionality of the respective leg to ensure it supports the others in culminating to the success of the process. The three legs of the McDonald’s supply chain framework comprised of the company, the suppliers, and the franchises. The company constitutes of the employees that run the restaurants are responsible to make necessary inventories and supply demands distributed across the restaurants the company operates globally (Mehbin and Hoque, 2013). The suppliers comprise of the partner companies that the company must work with to ensure the success of the entire process. For instance, the transportation companies, warehouses, outsourced vendors, corporate stores, and logistics experts. The franchise entity of the three-legged stool comprises of the franchise partners that the company works within various parts of the world. Thus, the cooperation of the three features is fundamental to ascertain the success of the overall supply chain framework guiding McDonald’s operations.

The overall design of the Starbucks supply chain is constituted of four functional groups guiding its framework. These include planning, sourcing, making, and delivery. The Starbucks supply chain is one of the most modern frameworks with extensive measures to guide the entire process from the source to the delivery of the end product to the consumer (Coffee, 2012). From coffee bean to the cup is a major feature of the framework that the company outlines the expectations from the producers of the coffee beans, the processing for transportation, intermediary suppliers, warehouses, and distribution logistics to all Starbucks locations globally (Dowding, n.d.). The Starbucks supply chain primarily focuses on ascertaining the quality of the coffee beans to translate into the quality of the cup of coffee that the consumer purchase as the end product. The precision of the Starbucks supply chain outlines profound measures in which the suppliers have to strictly adhere to successfully be part of Starbucks vendors list.

Thus, the supply chain framework in the respective company outlines the key features of the system in which they rely upon for success. The involvement and close cooperation of all partners is critical for the success of the overall supply chain in the respective company. The complex nature of the multinational corporate companies such as McDonalds and Starbucks require profound measures to ensure the success of the respective company. The ability of the company to streamline supply chain processes and participants quality maintenance impacts the overall success of the entire process (Sabel et al., 2017). Therefore, the supply chains of the two companies play a significant role in their success.

Decision-Making Processes

The decision-making processes are fundamental aspects of the supply chain system in any company. In the case of Starbucks and McDonalds, the process of making decisions is critical to ensure the success of the companies. While both exert critical similarities in running a top-bottom approach to the decision-making process in the supply chain, there is a sharp distinction in the further analysis of how decisions are made in the respective supply chain. The operations of supply chain partners and their involvement is critical for the success of the entire process. The assurance of the success of the supply chain requires that the cooperation of the suppliers and partners impact profoundly in streamlining decision-making measures attributed to the success of the system.

The decisions in McDonald’s are made following the stipulation of a ‘win-win’ relationship with suppliers that establish trust and loyalty between the business partners. The decisions are made every level across the organization that affects various levels of the supply chain system. The involvement of partners in the decision-making aspects of the organization asserts the value accorded to them by the company (Wemner and Anderson, 2008). In turn, this impacts on the improvement of the cooperation, trust, and loyalty of the suppliers to meet the code of suppliers’ requirements outlined by the company. McDonald’s provides a strict code of suppliers which they are expected to meet the stipulated regulations and adhere to the rules in the clauses. The top management close cooperation with the partners and suppliers is vital to decision-making in the supply chain management and processes of McDonald’s (Mehbin and Hoque, 2013). Thus, stipulate the process in which decisions are made by the company in close cooperation and partnership with key stakeholders in the supply chain process.

The Starbucks supply chain system stipulated the process in which decisions are made in the system. In the reorganization of the Starbucks supply chain and logistics system, the company created a single, global logistics system which facilitates in the decision-making process. The supply chain stipulated by Starbucks creates avenues in which the roasted and packaged beans at the regional distribution centers around the world (Yee et al., 2014). The regional distribution centers comprise a number of locations around the world that aid in the decision making process in the supply chain system. The distribution centers some owned and operated by the company while others are owned and operated by third-party logistics companies (3PLs) exert profound decision-making complexities in the company (Larson, 2008). Thus, the involvement of the key stakeholders, suppliers, and partners in the supply chain process is critical for decision-making. Hence, streamlining of all decisions is vital to the success of the company towards sustainability of quality and long-term functionality of the company.

Procurement Strategy

The procurement strategies impact profoundly on the performance of the overall supply chain in a company. The vast nature of McDonald’s prompted the company to adopt technology as a major feature of enhancing procurement of the key materials and/or products they require for the functionality of the company (Melnyk et al., 2014). The procurement feature of the supply chain system is critical to streamlining the functioning of the suppliers in the company. In McDonald’s, through eMac Digital platform, the company adopted an e-procurement system vital to strengthen the company’s capacity is value sustenance and efficiency of the supply chain processes (Manuj and Sahin, 2011). The e-procurement platform for McDonald’s is vital to both the company and the suppliers in managing critical information, sales, orders, transactions, and other supply chain functionalities. The e-procurement brings all McDonald’s suppliers to a common platform in which the entire supply chain process and functionalities can effectively be managed. Furthermore, the e-procurement platform used in managing the supply chain processes and functionalities in McDonald’s impacts profoundly in cutting the labor costs, supply prices, and intermediary loses for both the company and the suppliers (Mehbin and Hoque, 2013). Thus, improve on efficiency and success of the supply chain process of the company.

The functionalities of Starbucks constitute the utilization of a vertically integrated supply chain approach that allows the company to be thoroughly involved in the entire supply chain process. This includes the involvement of the company from the coffee been growing, production, roasting, packaging, distribution, among other logistics up to the cup of coffee that is ready for consumption (Coffee, 2012). The understanding of the entire supply chain processes in Starbucks impacts to the adoption of a vertically integrated system as the company’s driving procurement strategy. The vertically integrated system in the procurement strategy allows the company to work directly with approximately 300,000 coffee growers globally, suppliers, strategic partners, and other logistical players that the company works closely with to ascertain success sustainability (Geereddy, 2013). The vertically integrated system used in advancing procurement measures of the company stipulates the value of the products at every stage of the supply chain. The involvement of Starbucks in informed by the fact that, coffee farmers are extremely important towards assuring the same quality and flavor standards of coffee products across all Starbucks outlets globally (Yee et al., 2014). Thus, the procurement strategy utilized by Starbucks ensures the equality and value of coffee producers, suppliers, and other plays to maintain quality and standards of the coffee products developed by the company in various locations globally.

Production Strategy and Operations

The production strategies as well, as operations serve a key function towards the sustainability of the supply chain success. In Starbucks, the company outlines the Coffee and Farmer Equity (C.A.F.E.) standards as well, as Coffee Sourcing Guidelines (CSG) (Dowding n.d.). The measures are critical to streamlining the company measures on the production and operations core to sustaining the quality of the coffee products. The C.A.F.E. outlines the company’s expectations on the farmers ascertaining the quality of the production of the coffee at the lowest level (initial stage) of the supply chain processes (Larson, 2008). The application of C.A.F.E. and CSG strategies are crucial to ensure suppliers’ compliance with the ethical, quality, and sustainability standards outlined by the company. The strict measures are critical to ensuring the production and operations strategies in Starbucks remain to be a notch higher and high competitiveness in the industry. Starbucks utilizes stringent vetting processes that focus on ensuring coffee growers (farmers) meet and adhere to the stipulated production guidelines (Paryani, 2011). Furthermore, the measures are critical to ensuring the protection of worker’s rights, good working conditions, and humane environment for the operations of the company.

In the case of McDonald’s, the Supplier Code of Conduct serves as the guiding principle for the product strategy and operations approach. The McDonalds Supplier Code of Conduct stipulates the respect for human rights that all its suppliers must adhere and meet, assurance of workplace environment conduciveness, business integrity, and environmental management (De Blasio, 2008). The ability of the suppliers to meet the stipulated needs in the company is critical for the production strategy to meet sustainability and quality of the products. The provision of resources and materials essential for the development of key McDonald’s products. The adherence with the Suppliers’ Code of Conduct is a profound production to ensure that the producers focus on maintaining the quality of materials that the company purchases for continued development of products that consumptions in thousands of McDonald’s restaurants worldwide (Schelpher et al., 2013).

The production strategies in both McDonalds and Starbucks primarily focus on ensuring quality and high-functional standards of all the products from the initial stage to the ready product sold to the consumer. The production strategy direct impacts on the sustainability of the brand and reputation of the company through its products that maintain the same quality and flavor globally (Melnyk et al., 2014). For instance, McDonald’s production of cheese, vegetables, iceberg lettuce, chicken, and wheat products culminate in the quality of hamburger product made by the company. The identifying features of the hamburger brand, taste, and flavor must be maintained globally across all of McDonald’s restaurants. Similarly, Starbucks strict measures of coffee bean production to the cup of coffee is vital for the success of the company. Thus, from production, supply chain processes, and operations, to the production of final products are vital to the success of the companies.

Conclusion

In conclusion, the supply chain management in both McDonalds and Starbucks serve fundamental purposes towards the functionality and success of the respective companies. The supply chain management facilitates the tracking of key ingredients vital to the production of the final product that the respective company specializes in to maintain market share. The quality of ingredients is as important as the final product sold to the consumer by the company. The sustainability of quality from the producer of raw materials requires effective supply chain management measures to hold the suppliers accountable, maintain transparency of the entire process, and effective communication. The study analysis asserts the significance of close cooperation, trust, and loyalty in the relationship between the company and the suppliers. Therefore, the performance of the company, reputation, and brand sustainability can be guaranteed through effective supply chain management in both companies.

References

Coffee, S., 2012. Starbucks Company Timeline. Retrieved March27, p.2014.

De Blasio, G.G., 2008. Understanding McDonald’s Among the” World’s Most Ethical Companies”. EJBO-Electronic Journal of Business Ethics and Organization Studies.

Dowding, T.J., The Coffee Bean: A Value Chain and Sustainability Initiatives Analysis Melissa Murphy, University of Connecticut, Stamford CT USA.

Fristedt, M., Hansson, A., Huge-Brodin, M., Rehme, J. and Sandberg, E., 2012. Supply Chain Management in practice: A Case study of McDonald’s Sweden. Linköping University Electronic Press.

Geereddy, N., 2013. Strategic analysis of Starbucks corporation. Harward [Електронний ресурс].–Режим доступу: http://scholar. harvard. edu/files/nithingeereddy/files/starbucks_ case_analysis. pdf.

Larson, R.C., 2008. Starbucks a Strategic Analysis. Past Decisions and Future Options.

Manuj, I. and Sahin, F., 2011. A model of supply chain and supply chain decision-making complexity. International Journal of Physical Distribution & Logistics Management41(5), pp.511-549.

Mehbin, M. and Hoque Molla, Z., 2013. Strategy and Project analyses-Introduce MacDonald’s in Bangladesh.

Melnyk, S.A., Narasimhan, R. and DeCampos, H.A., 2014. Supply chain design: issues, challenges, frameworks, and solutions.

Paryani, K., 2011. Product quality, service reliability, and management of operations at Starbucks. International Journal of Engineering, Science and Technology3(7), pp.1-14.

Sabet, E., Yazdani, N., and De Leeuw, S., 2017. Supply chain integration strategies in fast-evolving industries. The international journal of logistics management28(1), pp.29-46.

Schleper, M.C., Busse, C. and Henke, M., 2013. Towards a standardized supplier code of conduct–requirements from a literature-based analysis. In Efficiency and Logistics (pp. 197-207). Springer, Berlin, Heidelberg.

Wemnér, T. and Andersson, J., 2008. A Strategic Decision-Making Model for Supply Chain-A Void to be Filled.

Yee, C.P., Mun, K.W.K., Yee, L.M. and Ling, Y., 2014. Factors Influencing Purchase Intention of Starbucks (Doctoral dissertation, UTAR).

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McDonalds and Starbucks Supply Chain Management Research Paper . (2022, August 23). Essay Writing . Retrieved September 29, 2022, from https://www.essay-writing.com/samples/mcdonalds-and-starbucks-supply-chain/
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McDonalds and Starbucks Supply Chain Management Research Paper . [online]. Available at: <https://www.essay-writing.com/samples/mcdonalds-and-starbucks-supply-chain/> [Accessed 29 Sep. 2022].
McDonalds and Starbucks Supply Chain Management Research Paper [Internet]. Essay Writing . 2022 Aug 23 [cited 2022 Sep 29]. Available from: https://www.essay-writing.com/samples/mcdonalds-and-starbucks-supply-chain/
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